Argentina's Macri faces rising complaints over import policies

FILE PHOTO: Photographers take pictures of Argentina's President Mauricio Macri during the opening of a new legislative session in Buenos Aires, Argentina March 1, 2017. REUTERS/Martin Acosta

BUENOS AIRES (Reuters) - President Mauricio Macri’s promises to end trade restrictions and open Argentine commerce to the world have fallen flat for many importers, who are going to court to free up goods trapped in the country’s byzantine customs system.

The delays have led companies to file an increasing number of injunctions asking judges to require the government to release their imports, according to interviews with three law firms specializing in customs issues, sources at two importing companies and a source at Argentina’s Production Ministry.

They said it was difficult to estimate the total number of cases because they are usually settled out of court.

In Argentina, importers buy goods and then must ask the government for permission to bring them into the country. Under Macri, the number of overall goods that need import licenses has nearly tripled to 1,628 up from 618 under the previous government, according to official government data.

The increased requirements were meant to protect jobs during a recession, a source at the government’s Production Ministry said.

“This is protectionism, plain and simple,” Ruben Garcia, president of the Argentine Chamber of Importers, said in an interview earlier this month. “Importers are looking for judicial rulings because there are impediments that should not exist.”

At the same time, Macri is fielding criticism from manufacturers who fear they will not be able to compete with a rush of imported goods as Macri promises to liberalize trade.

The dual complaints highlight the government’s difficult balancing act in trying to open Argentina’s economy without prompting layoffs and popular discontent ahead of congressional elections later this year.

Since taking office in December 2015, Macri has eliminated or reduced export taxes and restrictions on agricultural products and minerals, allowed the peso currency to float and has aggressively pursued free-trade pacts.

He has taken some steps to liberalize imports as well, recently eliminating a 35 percent tariff on computer imports. That prompted the closure of a Bangho laptop assembly factory in Buenos Aires and led to 200 lost jobs and fears of additional cuts even as consumers welcomed the prospect of cheaper electronics.

Despite Macri’s promised economic opening, the value of imported goods - mostly intermediate goods for local production - fell 6.9 percent in 2016 compared with 2015, according to the private Institute of Statistics and Census.

That was due to a weak economy and inflation of around 40 percent last year that reduced demand as well as new requirements for import licenses.

The licenses mostly affect goods that could be classified as either final products or parts to be used in manufacturing, customs lawyers said.

“It is very difficult to get approval,” said one businessman who imports fabric to make clothes in Buenos Aires who spoke on condition of anonymity. “There are delays for both fabrics and spare parts for machinery.”

The source at the Production Ministry, which handles international trade policy, said the majority of judicial claims came from companies that sought to import volumes of goods out of proportion to their past activities, raising concerns of black-market dealing.

WORRIES ABOUT IMPORTS OF SHOES, TOYS

He said Macri’s government had worked hard to dismantle smuggling through the ports and now companies were asking to import more goods legally.

“When we see a reasonable company, with history, having these types of problems, we resolve them,” said the source, who requested anonymity because he was not authorized to speak to the press.

At the same time, footwear, clothing and toy companies are lobbying to block imports to prevent competition.

Imports of shoes rose to 27.3 million pairs in 2016 from 22.6 million the prior year while imported textiles were 61 percent of the local market last year from 50 percent in 2015.

“Our level of activity fell by 25 percent, more than the decline in consumption, which was 15 percent,” said Jorge Sorabilla, president of the Pro-tejer Foundation, a lobby group for textile and clothing companies. “That additional 10 percent is due to imports.”